Michigan Ain’t the Worse

Came back from this year’s Detroit Regional Chamber’s terrific Mackinac Policy Conference with one big take away: next year’s conference should be about what is right with Michigan. Folks are so down on Michigan. The public conversation is that we are the worse in everything. It ain’t true!

Two recent articles provide evidence that it is a lot worse elsewhere. The New  York Times has a terrific feature on Illinois. As the Times writes: For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up.

Then there is the Wall Street Journal on Texas. They have an $18 billion state budget deficit for their upcoming two year budget cycle. 20 percent of their state budget. Michigan looks like a paragon of fiscal responsibility compared to Illinois and Texas!

So here is the reality:  Michigan does not have the highest taxes, the highest business taxes, the largest budget deficit or the largest unfunded pension liabilities. We are not the highest spending state. We do not have the most partisan or least able to make hard decision state government. Far from it. On most of these metrics we are in the middle of the pack if not better than average.

There is a widespread belief if a state’s economy is not doing well – or in our case is awful for a decade – it must be because of state government. It’s not true. Illinois and Texas have had far better decades than us economically despite even worse fiscal management. Do we need to fix the structural deficit? Of course. Is fixing it the key to improving the Michigan economy? Highly unlikely.

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